Paul Ryan's Budget As An Early Christmas Gift To Obama

President Obama should thank Paul Ryan for the budget that he pushed through the House. Ryan's budget has provided a clear target for him to attack. He will call Ryan's budget "Social Darwinism" because it cuts programs for our neediest citizens. He will also present it as a form of class warfare against middle class Americans. He will place the blame for our budget deficits on the Bush tax cuts, which go primarily to the wealthy, and for the costly wars that he started in the Mid-East. We will have to see how this plays out in the media. The response of the media will determine whether Ryan or Obama are serious about budget deficits and which of them is engaged in class warfare.

Energy Efficiency And The Jevons Paradox

This article in response to those who argue that the use of energy efficient equipment will not reduce co2 emissions. That argument is called the Jevons Paradox. Articles have recently been written in The New Yorker and the WSJ that extend the Jevons Paradox to the use of energy efficient cars like the Prius. The Prius Paradox assumes that owners of energy efficient vehicles will drive more miles because of the lower cost and there will be no reduction in co2 emissions. The data collected in California show that Prius owners do not drive more miles that owners of other vehicles. They save about $1,500 in energy expenditures and there is no evidence that they spend their savings on other forms of energy consumption. This article will not be reported in the WSJ or in other media owned by Rupert Murdoch.

More On The Relationship Between Economics And Science

This post and the comment that follow may interest some of you who might wonder whether economics is a science or bull***t. It was written in response to a bloger who came down on the side of bull***t. I posted his blog a couple of days ago. Its not uncommon for young economists to wrestle with a less extreme form of a question about how economics compares with hard sciences like physics. The social sciences are different from the hard sciences in many ways. Do these differences exclude them from the field called science?

Some Parts Of The US Are Still In Recession

This article describes the uneven economic recovery in the US. Areas that were hit hardest by the boom and bust in real estate prices are still in recession. Small local businesses have suffered the most in these areas. Unlike national businesses, they are unable to sell their products and services in parts of the country that are making a stronger recovery. The deleveraging of mortgage debt will limit spending and recovery in the harder hit parts of the country for a long time. Most of the households in these areas do not have savings or other assets to offset their real estate losses. Furthermore, banks have responded to their losses from bad loans by tightening credit. The boom in these areas was based upon credit and the loss of credit exacerbates the bust.

This problem is not unique to the US. Ireland and Spain are going through the same kind of real estate and credit cycle.

How The Conservative Media Neuter Democratic Administrations

This article is about political interference by the Obama administration over a FDA decision to require that movie theaters place a notice on popcorn boxes that the caloric content of the butter is greater than two Big Macs. It also references an earlier decision by the administration to overturn the FDA approval of over the counter contraceptives. The FDA believes that its decisions should be based on the science and not the politics. The administration argues that these kinds of decisions are just the kinds of things that will be plastered all over the conservative media. The administration is correct. Fox News and Rush Limbaugh would have a field day with those decisions. The administration's decisions to over ride the FDA decisions shows the power of the conservative media in America. The GOP can safely ignore the media, even on much more important matters. For example, the Ryan budget plan, that was passed by the House, is being sold as a plan to cut budget deficits. Projections by the CBO show that it actually increases budget deficits. There were some critical op-eds and editorials in the NYT, and few other places, but very radical proposals by the GOP do not receive anything like the attention that the conservative media give to even minor decisions like those proposed by the FDA.

The Supreme Court Debate Over The Healthcare Bill Gets A Failing Grade

This article by Steve Pearlstein is the best of many that I have read on the Supreme Court's debate over Obama's healthcare reform bill. It does a good job of defining the basic issues, and it provides a devastating critique of the questions asked by Scalia and Alito who cannot make a distinction between the market for healthcare and the market for broccoli. Its a sad commentary on what has happened to the quality of the justices that we put on the Supreme Court under Bush senior and Bush junior. They passed the political test, that was the chief concern of the GOP, but they have failed the test of judicial temperament that we expect from those who we elevate to the Supreme Court. Not too long ago the Supreme Court was held in the highest regard by most Americans. That is no longer true, and this debate makes the reason apparent.

Why Monetary Policy Has Been Unsuccessful In Achieving Full Employment

These are the slides that the President of the Federal Reserve Bank Of Minneapolis used to explain why monetary policy has been more successful in controlling inflation than it has in maximizing employment. His analysis assumes that there are two markets. There is a market for labor and a product market. Monetary policy has affected both markets, but it needs to be complemented by fiscal policy to achieve full-employment.

The presentation is a bit technical but the assumptions that are made about the factors that affect product and labor demand are clearly described. The presentation also provides his view of the events in 2007 that caused the demand for labor and products to decline dramatically. There will be lots of discussions about his views on the limits of monetary policy and the fiscal policies that are required to boost labor demand.